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Exhibit 99.1
Execution
Version
SECURITIES PURCHASE
AGREEMENT
This Securities Purchase
Agreement (this “ Agreement ”) is made and
entered into as of December 20, 2007, by and among Pinnacle
Data Systems, Inc., an Ohio corporation (the “ Company
”), and each purchaser signatory hereto (each, including its
successors and assigns, a “ Purchaser ” and
collectively, the “ Purchasers ”).
BACKGROUND
INFORMATION
A. The Company and each
Purchaser are executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the
“ Securities Act ”), and Rule 506 of Regulation
D (“ Regulation D ”) as promulgated by the
United States Securities and Exchange Commission (the “
Commission ”) under the Securities Act.
B. Each Purchaser, severally
and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement,
(i) that aggregate number of shares of the common stock, no
par value per share (the “ Common Stock ”), of
the Company, set forth below such Purchaser’s name on the
signature page of this Agreement (which aggregate amount for all
Purchasers together shall be 1,250,000 shares of Common Stock and
shall be collectively referred to herein as the “
Shares ”) and (ii) warrants, in substantially the
form attached hereto as Exhibit A (the “
Warrants ”), to acquire up to that number of
additional shares of Common Stock equal to 30% of the number of
Shares purchased by such Purchaser (rounded up to the nearest whole
share) (the shares of Common Stock issuable upon exercise of or
otherwise pursuant to the Warrants collectively are referred to
herein as the “ Warrant Shares ”). The Shares,
the Warrants and the Warrant Shares collectively are referred to
herein as the “ Securities ”.
C. Contemporaneously with the
execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the
“ Registration Rights Agreement ”), pursuant to
which, among other things, the Company will agree to provide
certain registration rights with respect to the Shares and the
Warrant Shares under the Securities Act and the rules and
regulations promulgated thereunder and applicable state securities
laws.
PROVISIONS
NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions . In
addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms shall have the
meanings indicated in this Section 1.1 :
“ Action ”
means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or
investigation, to the Company’s Knowledge, pending or
threatened in writing (or otherwise) against the Company or any of
its properties before or by any federal, state, county, local or
foreign court, arbitrator, governmental or administrative agency,
regulatory authority, stock market, stock exchange or trading
facility.
“ Affiliate
” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries,
Controls, is controlled by or is under common control with such
Person, as such terms are used in and construed under Rule
144.
“ Agreement
” has the meaning set forth in the Preamble.
“ Aspan ”
means Aspan Computer Repair Laboratories B.V.
“ Business Day
” means a day, other than a Saturday or Sunday, on which
banks in Columbus, Ohio are open for the general transaction of
business.
“ Closing
” means the closing of the purchase and sale of the Shares
and the Warrants pursuant to this Agreement.
“ Closing Date
” means the Trading Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto,
and all of the conditions set forth in Sections 2.1, 2.2, 5.1
and 5.2 are satisfied, or such other date as the parties may
agree.
“ Commission
” has the meaning set forth in the Background
Information.
“ Common Stock
” has the meaning set forth in the Background Information,
and also includes any securities into which the Common Stock may
hereafter be reclassified or changed.
“ Common Stock
Equivalents ” means any securities of the Company that
would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock or other securities that
entitle the holder to receive, directly or indirectly, Common
Stock.
“ Company
” has the meaning set forth in the Preamble.
“ Company
Counsel ” means Schottenstein, Zox & Dunn Co.,
L.P.A.
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“ Company
Deliverables ” has the meaning set forth in
Section 2.2(a) .
“ Company’s
Knowledge ” means with respect to any statement made to
the knowledge of the Company, that the statement is based upon the
actual knowledge of the officers of the Company having
responsibility for the matter or matters that are the subject of
the statement.
“ Control
” (including the terms “controlling”,
“controlled by” or “under common control
with”) means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
“ Disclosure
Materials ” has the meaning set forth in
Section 3.1(h) .
“ Effective Date
” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement
is first declared effective by the Commission.
“ Escrow Agent
” has the meaning set forth in Section 4.11
.
“ Escrow
Agreement ” has the meaning set forth in
Section 4.11 .
“ Escrow Amount
” means the proceeds received from the sale of the Escrow
Shares and the Escrow Warrants, which shall be used to used to
finance the Company’s acquisition of the stock of
Aspan.
“ Escrow Shares
” means 600,000 Shares.
“ Escrow
Warrants ” has the meaning set forth in
Section 2.1(c) .
“ Escrow Warrant
Shares ” means 180,000 Warrant Shares.
“ Exchange Act
” means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated
thereunder.
“ Exempt
Issuance ” means the issuance of (a) shares of
Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan, (b) securities
upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities exercisable or
exchangeable for or convertible into shares of Common Stock issued
and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement
to increase the number of such securities or to decrease the
exercise, exchange or conversion price of such securities, and
(c) securities issued pursuant to acquisitions or strategic
transactions, provided that any such issuance shall only be to a
Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the
Company.
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“ GAAP ”
means U.S. generally accepted accounting principles, as applied by
the Company.
“ Indemnified
Person ” has the meaning set forth in
Section 4.9(b) .
“ Intellectual
Property ” has the meaning set forth in
Section 3.1(p) .
“ Legend Removal
Date ” has the meaning set forth in
Section 4.1(c) .
“ Lien ”
means any lien, charge, claim, encumbrance, security interest,
right of first refusal, preemptive right or other restrictions of
any kind (other than restrictions on transfer under applicable
securities laws or other restrictions imposed under the Transaction
Documents).
“ Losses ”
has the meaning set forth in Section 4.9(a)
.
“ Material Adverse
Effect ” means any of (i) a material and adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material and adverse effect on
the results of operations, assets, business or financial condition
of the Company and the Subsidiaries, taken as a whole, or
(iii) any material adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.
“ Material
Contract ” means any contract of the Company that was
filed (or should have been filed) as an exhibit to the SEC Reports
pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.
“ Material
Permits ” has the meaning set forth in
Section 3.1(n) .
“ Ohio Courts
” means the state and federal courts sitting in the City of
Columbus, Ohio.
“ Outside Date
” means March 20, 2008.
“ Person ”
means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company,
joint venture, sole proprietorship, unincorporated organization,
governmental authority or any other form of entity not specifically
listed herein.
“ Press Release
” has the meaning set forth in Section 4.7
.
“ Principal Trading
Market ” means the Trading Market on which the Common
Stock is primarily listed on and quoted for trading, which, as of
the date of this Agreement and the Closing Date, shall be the
American Stock Exchange.
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“ Proceeding
” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.
“ Purchaser
” has the meaning set forth in the Recitals.
“ Purchase Price
” means $2.00 per Share.
“ Purchaser
Deliverables ” has the meaning set forth in
Section 2.2(b) .
“ Purchaser
Party ” has the meaning set forth in
Section 4.9(a) .
“ Registration
Rights Agreement ” has the meaning set forth in the
Background Information.
“ Registration
Statement ” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and
covering the resale by the Purchasers of the Registrable Securities
(as defined in the Registration Rights Agreement).
“ Regulation D
” has the meaning set forth in the Background
Information.
“ Required
Approvals ” has the meaning set forth in
Section 3.1(e) .
“ Rule 144
” means Rule 144 promulgated by the Commission pursuant to
the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the
Commission having substantially the same effect as such
Rule.
“ SEC Reports
” has the meaning set forth in Section 3.1(h)
.
“ Securities
” has the meaning set forth in the Background
Information.
“ Securities Act
” has the meaning set forth in the Background
Information.
“ Shares ”
has the meaning set forth in the Background Information.
“ Short Sales
” include, without limitation, all “short sales”
as defined in Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of
direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange
Act) and similar arrangements (including on a total return basis),
and sales and other transactions through non-U.S. broker dealers or
foreign regulated brokers.
“ Subscription
Amount ” means with respect to each Purchaser, the
aggregate amount to be paid for the Shares and the related Warrants
purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading
“Aggregate Purchase Price (Subscription Amount)”. For
the avoidance of doubt, the Subscription Amount for each Purchaser
shall equal: (i) the Purchase Price; multiplied by
(ii) the number of Shares to be purchased at the Closing by
such Purchaser.
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“ Trading
Affiliate ” has the meaning set forth in
Section 3.2(i) .
“ Trading Day
” means (i) a day on which the Common Stock is listed or
quoted and traded on its Principal Trading Market (other than the
OTC Bulletin Board), or (ii) if the Common Stock is not listed
on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as
reported by the OTC Bulletin Board, or (iii) if the Common
Stock is not quoted on any Trading Market, a day on which the
Common Stock is quoted in the over-the-counter market as reported
in the “pink sheets” by Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting
prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i), (ii) and
(iii) hereof, then Trading Day shall mean a Business
Day.
“ Trading Market
” means whichever of the New York Stock Exchange, the
American Stock Exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital Market or the OTC Bulletin
Board on which the Common Stock is listed or quoted for trading on
the date in question.
“ Transaction
Documents ” means this Agreement, the schedules and
exhibits attached hereto, the Warrants, the Registration Rights
Agreement and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
“ Transfer Agent
” means Computershare Investor Services, or any successor
transfer agent for the Company.
“ Warrants
” has the meaning set forth in the Background
Information.
“ Warrant Shares
” has the meaning set forth in the Background
Information.
ARTICLE II
PURCHASE AND
SALE
2.1 Closing
.
(a) Amount .
Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from
the Company, the number of Shares and Warrants, for the aggregate
Purchase Price, as indicated below such Purchaser’s name on
the signature page of this Agreement. The Warrants shall have a
per-share exercise price equal to the greater of (i) $2.30 or
(ii) in the event where such exercise price will require
shareholder approval under Section 713 of the American Stock
Exchange Company Guide, the amount that is 10% higher than the
closing price for the Company’s common stock on the last
Trading Day immediately prior to the Closing Date.
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(b) Closing .
The Closing of the purchase and sale of the Shares and Warrants
shall take place at the offices of Company Counsel, 250 West
Street, Suite 700, Columbus, Ohio on the Closing Date or at such
other locations or remotely by facsimile transmission or other
electronic means as the parties may mutually agree.
(c) Form of
Payment . On the Closing Date, (i) each Purchaser shall
pay its respective Subscription Amount to the Company for the
Shares and the Warrants to be issued and sold to such Purchaser at
the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions as
previously provided by the Company, less the Escrow Amount, which
shall be paid to the Escrow Agent in accordance with the terms of
the Escrow Agreement, (ii) the Company shall irrevocably
instruct the Transfer Agent to deliver to each Purchaser by
delivery of one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in
Section 4.1(b) ), evidencing the number of Shares such
Purchaser is purchasing as is set forth on such Purchaser’s
signature page to this Agreement next to the heading “Number
of Shares to be Acquired”, less the Escrow Shares, within
three (3) calendar days after the Closing, (iii) the
Company shall issue to each Purchaser a Warrant pursuant to which
such Purchaser shall have the right to acquire such number of
Warrant Shares as is set forth on such Purchaser’s signature
page to this Agreement next to the heading “Underlying Shares
Subject to Warrant”, less the Escrow Warrant Shares, in the
case of clauses (ii) and (iii), duly executed on behalf of the
Company and registered in the name of such Purchaser, (iv) the
Company shall irrevocably instruct the Transfer Agent to deliver to
the Escrow Agent by delivery of one more stock certificates, free
and clear of all restrictive and other legends (except as expressly
provided in Section 4.1(b) ), evidencing the Escrow
Shares, within three (3) calendar days after the Closing and
(v) the Company shall deliver to the Escrow Agent a Warrant in
favor of each Purchaser pursuant to which such Purchaser shall have
the right to acquire the Escrow Warrant Shares (the “
Escrow Warrants ”).
2.2 Closing Deliveries
.
(a) On or prior to the
Closing, the Company shall issue, deliver or cause to be delivered
to each Purchaser the following (the “ Company
Deliverables ”):
(i) this Agreement, duly
executed by the Company;
(ii) a copy of duly
executed instructions to the Transfer Agent instructing it to issue
one or more stock certificates, free and clear of all restrictive
and other legends (except as provided in Section 4.1(b)
), evidencing the Shares subscribed for by Purchaser hereunder, as
indicated below such Purchaser’s name on the applicable
signature page hereto, registered in the name of such
Purchaser;
(iii) a Warrant,
executed by the Company and registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to
acquire such number of Warrant Shares, as indicated below such
Purchaser’s name on the applicable signature page hereto, on
the terms set forth therein; and
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(iv) the Registration
Rights Agreement, duly executed by the Company.
(b) On or prior to the
Closing, each Purchaser shall deliver or cause to be delivered to
the Company the following (the “ Purchaser
Deliverables ”):
(i) this Agreement, duly
executed by such Purchaser;
(ii) its Subscription
Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price
(Subscription Amount)” indicated below such Purchaser’s
name on the applicable signature page hereto by wire transfer to an
account previously designated in writing by the Company for such
purpose;
(iii) the Registration
Rights Agreement, duly executed by such Purchaser; and
(iv) a fully completed
and duly executed Selling Stockholder Questionnaire in the form
attached as Annex B to the Registration Rights
Agreement.
(c) On or prior to the
Closing, the Company and each Purchaser, as applicable, shall
deliver or cause to be delivered to the Escrow Agent the Escrow
Amount, the Escrow Shares, the Escrow Warrants and any other
deliverables as required by the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES
3.1 Representations and
Warranties of the Company . The Company hereby represents and
warrants as of the date hereof and the Closing Date (except for the
representations and warranties that speak as of a specific date,
which shall be made as of such date), to each of the Purchasers
that, except as set forth in the Schedules delivered
herewith:
(a) Subsidiaries . The
Company has no direct or indirect Subsidiaries.
(b) Organization and
Qualification . The Company is an entity duly incorporated or
otherwise organized, validly existing and in good standing under
the laws of the State of Ohio (as applicable), with the requisite
power and authority to own or lease and use its properties and
assets and to carry on its business as currently conducted. The
Company is not in violation of any of the provisions of its
Articles of Incorporation, Code of Regulations or other
organizational or charter documents. The Company is duly qualified
to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have
or reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
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(c) Authorization;
Enforcement; Validity . The Company has the requisite corporate
power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery by the Company
of each of the Transaction Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action
on the part of the Company, and no further corporate action is
required by the Company, its Board of Directors or its shareholders
in connection therewith other than in connection with the Required
Approvals. Each of the Transaction Documents to which it is a party
has been (or upon delivery will have been) duly executed by the
Company and is, or when delivered in accordance with the terms
hereof, will constitute the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable
principles of general application.
(d) No Conflicts
. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby or thereby
do not and will not (i) conflict with or violate any provision
of the Company’s Articles of Incorporation, Code of
Regulations or other organizational or charter documents,
(ii) conflict with, or constitute a default (or an event that
with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or
assets of the Company or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or
other instrument (evidencing a Company debt or otherwise) or other
understanding to which the Company is a party or by which any
property or asset of the Company is bound, or affected, or
(iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including
federal and state securities laws and regulations and the rules and
regulations, assuming the correctness of the representations and
warranties made by the Purchasers in this Agreement, of any
self-regulatory organization to which the Company or its securities
are subject, including all applicable Trading Markets), or by which
any property or asset of the Company is bound or affected, except
in the case of clauses (ii) and (iii) such as would not,
individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect.
(e) Filings,
Consents and Approvals . The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to,
or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance
by the Company of the Transaction Documents (including the issuance
of the Securities), other than (i) the filing with the
Commission of one or more Registration Statements in accordance
with the requirements of the Registration Rights Agreement,
(ii) filings required by applicable state securities laws,
(iii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act,
(iv) the filing of any requisite notices and/or application(s)
to the Principal
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Trading Market for the issuance and sale
of the Common Stock and the Warrants and the listing of the Common
Stock for trading or quotation, as the case may be, thereon in the
time and manner required thereby, (v) the filings required in
accordance with Section 4.7 of this Agreement and
(vi) those that have been made or obtained prior to the date
of this Agreement (collectively, the “ Required
Approvals ”).
(f) Issuance of the
Securities . The Securities have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and
nonassessable and free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents
or imposed by applicable securities laws, and shall not be subject
to preemptive or similar rights. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement,
the Shares and the Warrant Shares will be issued in compliance with
all applicable federal and state securities laws. As of the Closing
Date, the Company shall have reserved from its duly authorized
capital stock not less than 100% of the maximum number of shares of
Common Stock issuable upon exercise of the Warrants (without taking
into account any limitations on the exercise of the Warrants set
forth in the Warrants). The Company shall, so long as any of the
Warrants are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise of the Warrants,
100% of the number of shares of Common Stock issuable upon exercise
of the Warrants (without taking into account any limitations on the
exercise of the Warrants set forth in the Warrants).
(g)
Capitalization . The number of shares and type of all
authorized, issued and outstanding capital stock, options and other
securities of the Company (whether or not presently convertible
into or exercisable or exchangeable for shares of capital stock of
the Company) has been set forth in the SEC Reports and has changed
since the date of such SEC Reports only to reflect stock option and
warrant exercises that do not, individually or in the aggregate,
have a material effect on the issued and outstanding capital stock,
options and other securities. All of the outstanding shares of
capital stock of the Company are duly authorized, validly issued,
fully paid and non-assessable, have been issued in compliance in
all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe
for or purchase any capital stock of the Company. Except as
specified in the SEC Reports: (i) no shares of the
Company’s capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or
permitted by the Company; (ii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the
Company or options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company;
(iii) there are no outstanding debt securities, notes, credit
agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the
Company is or may become bound; (iv) there are no financing
statements securing obligations in any material amounts, either
singly or in the aggregate, filed in connection with the Company;
(v) there are no
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agreements or arrangements under which
the Company is obligated to register the sale of any of their
securities under the Securities Act (except the Registration Rights
Agreement); (vi) there are no outstanding securities or
instruments of the Company or which contain any redemption or
similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may
become bound to redeem a security of the Company; (vii) there
are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of the
Securities; (viii) the Company does not have any stock
appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (ix) the
Company has no liabilities or obligations required to be disclosed
in the SEC Reports (as defined herein) but not so disclosed in the
SEC Reports, other than those incurred in the ordinary course of
the Company’s businesses and which, individually or in the
aggregate, do not or could not have or reasonably be expected to
have a Material Adverse Effect.
(h) SEC Reports
. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for
the twelve months preceding the date hereof (or such shorter period
as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively
referred to herein as the “ SEC Reports ” and
together with this Agreement and the Schedules to this Agreement
(if any), the “ Disclosure Materials ”), on a
timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration
of any such extension. All Material Contracts to which the Company
is a party or to which the property or assets of the Company are
subject are included as part of or specifically identified in the
SEC Reports.
(i) Financial
Statements . The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with
GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company as
of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments.
(j) Material
Changes . Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there have been no events,
occurrences or developments that have had or could reasonably be
expected to have, either individually or in the aggregate, a
Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than
(A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in
the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting or
the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or
distribution of
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cash or other property to its
shareholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees
of the Company), (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except Common
Stock issued in the ordinary course pursuant to existing Company
stock option plans or executive and director corporate arrangements
disclosed in the SEC Reports and (vi) there has not been any
material change or amendment to, or any waiver of any material
right under, any Material Contract under which the Company or any
of its assets is bound or subject. Except for the issuance of the
Securities contemplated by this Agreement, no event, liability or
development has occurred or exists with respect to the Company or
its business, properties, operations or financial condition that
would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made that has
not been publicly disclosed at least one Trading Day prior to the
date that this representation is made.
(k) Litigation .
There is, to the Company’s Knowledge, no Action that
(i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. The Company and, to the
Company’s Knowledge, any current director or officer thereof
(in his or her capacity thereof), is not nor has been during the
five-year period prior to the Closing Date the subject of any
Action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty
except as specifically disclosed in the SEC Reports. To the
Company’s Knowledge, there has not been, there is not pending
or there is not contemplated, any investigation by the Commission
involving the Company or, to the Company’s Knowledge, any
current or former director or officer of the Company (in his or her
capacity as such). The Commission has not issued any stop order or
other order suspending the effectiveness of any registration
statement filed by the Company under the Exchange Act or the
Securities Act.
(l) Employment
Matters . No material labor dispute exists or, to the
Company’s Knowledge, is imminent with respect to any of the
employees of the Company that could reasonably be expected to have
a Material Adverse Effect. None of the Company’s employees is
a member of a union that relates to such employee’s
relationship with the Company, and the Company is not a party to a
collective bargaining agreement, and the Company believes that its
relationship with its employees is good.
(m) Compliance .
The Company (i) is not in default under or in violation of
(and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the
Company under), nor has the Company received notice of a claim that
it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived), (ii) is not in violation of any order of any
court, arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, and (iii) is not nor has
been in violation of, or in receipt of notice that it is in
violation of, any statute, rule or regulation of any governmental
authority applicable to the Company, except in each case as would
not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect.
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(n) Regulatory
Permits . The Company possesses all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
its business as described in the SEC Reports, except where the
failure to possess such permits, individually or in the aggregate,
has not had and could not reasonably be expected to have a Material
Adverse Effect (“ Material Permits ”), and the
Company has not received any notice of proceedings relating to the
revocation or modification of any such Material Permits.
(o) Title to
Assets . The Company does not own any real property. The
Company has good and marketable title to all personal property
owned by it that is material to the business of the Company, taken
as whole, in each case free and clear of all Liens, except as
disclosed in the SEC Reports or such as do not materially affect
the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company. Any real
property and facilities held under lease by the Company are held by
it under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use
made and proposed to be made of such property and buildings by the
Company.
(p) Patents and
Trademarks . The Company owns, possesses, licenses or has other
rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “ Intellectual
Property ”) necessary for the conduct of its business now
conducted. Except as set forth in the SEC Reports and except where
such violations or infringements could not reasonably be expected
to have, either individually or in the aggregate, a Material
Adverse Effect, (a) there are no rights of third parties to
any such Intellectual Property; (b) to the Company’s
Knowledge, there is no infringement by third parties of any such
Intellectual Property; (c) to the Company’s Knowledge,
there is no pending or threatened action, suit, proceeding or claim
by others challenging the Company’s rights in or to any such
Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (d) to
the Company’s Knowledge, there is no pending or threatened
action, suit, proceeding or claim by others challenging the
validity or scope of any such Intellectual Property; and
(e) to the Company’s Knowledge, there is no pending or
threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of
others.
(q) Insurance .
The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
the Company believes to be prudent and customary in the businesses
and locations in which the Company is engaged. The Company has not
received any notice of cancellation of any such
insurance,
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